Labour is calling for the government to include more provisions for financial services in the UK’s post-Brexit trade deals, with one shadow cabinet minister praising the “tremendous work” of the City during Covid.
Shadow international trade secretary Emily Thornberry said at a fringe event at the Labour conference that the economic crisis would have been “substantially worse if it wasn’t for the preparedness and resilience of the financial services sector”.
The UK-EU Brexit trade deal did not include provisions for services, despite making up 80 per cent of the British economy.
This meant the City lost its pre-Brexit access to EU markets, with companies now having to navigate a patchwork of regulations from individual member states.
Most UK financial services firms were prepared for Brussels not granting equivalence and moved resources and jobs to European capitals.
Thornberry said at an event for TheCityUK business group that “I don’t see sufficient plans for the government to build on that strength [of the financial services sector] in trade negotiations today”.
“That needs to change if we’re going to maximise the export potential for our services sector and reap the benefits it will bring the UK in jobs and growth,” she said.
She also called for chancellor Rishi Sunak to push for the UK to regain access to EU financial services markets by brokering an equivalence deal with Brussels.
This is now considered highly unlikely as it would mean the UK would need to remain within the orbit of the EU’s financial services regulations.
Sunak is already considering a swathe of regulatory changes for the sector, including allowing SPACs to list in London and changing share listing rules to make it easier for start-ups to go public.
Thornberry said: “Whatever gains there may be to make from increasing financial services exports to the rest of the world, we all know they are still not nearly as significant as the benefits we will gain from the ability to do business in Europe.
“It remains the Labour party’s position that securing regulatory equivalence for the financial services sector and mutual recognition of qualifications should be top priority when it comes to trade policy. We urge the government to make it their priority too.”